Hale v. State Farm Mut. Ins. Co.
| Decision Date | 06 December 1971 |
| Citation | 3 Pack 620,474 S.W.2d 905,225 Tenn. 620 |
| Parties | , 225 Tenn. 620 Barry HALF, bnf Wallace Hale v. STATE FARM MUTUAL INSURANCE CO. and Nationwide Mutuel Insurance Co. Wallace HALE v. STATE FARM MUTUAL INSURANCE CO. and Nationwide Mutual Insurance Co. |
| Court | Tennessee Supreme Court |
Jack H. McPherson, Jr., Badger & McPherson, Kingston, for Barry Hale and Wallace Hale.
Jess E. Pearman, Harriman, for State Farm Mutual Ins. Co.
Robert B. Ray, Poore, Cox, Baker, McAuley, Ray & Byrne, Knoxville, for Nationwide Mutual Ins. Co.
The instant case is before us on appeal from the Circuit Court of Roane County. Our jurisdiction is directly invoked to determine the present controversy since the facts have been stipulated below.
In this opinion the parties will be designated by their adversary status in the trial court; that is, Barry Hale and Wallace Hale, as plaintiffs, and State Farm Mutual Insurance Company and Nationwide Mutual Insurance Company, as defendants.
The plaintiffs in the instant case filed declarations seeking to recover for alleged breaches of insurance contracts by defendants. The declarations of plaintiffs set forth identicial allegations upon which recovery is based. The plaintiffs aver that prior to June 25, 1967, State Farm and Wallace Hale entered into a contract of insurance; that the agreement between State Farm and Wallace Hale provided among other things to indemnify the named insured or his family for damages suffered by virtue of the negligence of an uninsured motorist; that prior to aforementioned date Nationwide entered into a contract of insurance with Herman O. Wilkerson; and that the policy issued by Nationwide provided that Nationwide would compensate the insured or his guest for damages sustained through the negligence of an uninsured motorist.
Plaintiffs further allege that on June 25, 1967, Barry Hale, the minor son of Wallace Hale, sustained serious bodily injury in an automobile accident while riding in the vehicle of Herman O. Wilkerson as a guest passenger; that the automobile accident was the result of the negligence of Joyce Rievley, an uninsured motorist; that on June 20, 1968, Barry Hale, by his next friend Wallace Hale, filed suit against Joyce Rievley seeking recovery for the damages sustained in the automobile accident; that on the same date Wallace Hale instituted an action against Joyce Rievley to recover for loss of services of his minor son; that both defendants were promptly notified of the filing of these suits; that on September 18, 1969, a judgment was entered in favor of Barry Hale in the amount of $4,800.00 and Wallace Hale was adjudged to be lawfully entitled to the sum of $5,000.00 for his loss of services of his minor son; that after these judgments became final demand was made upon both defendants for payment of the damages sustained; and that defendants have willfully refused to pay in violation of their contractual obligations.
Nationwide filed its plea to the declaration asserting that it did not promise as the plaintiff alleges and that it does not owe the plaintiff.
State Farm in its plea admits that it issued a policy of liability insurance to Wallace Hale prior to the date of the accident; that Barry Hale was riding as a guest passenger in the automobile of Herman O. Wilkerson when it was involved in an accident with a vehicle driven by Mrs. Rievley; that Barry Hale did receive some injuries in this accident but that the extent of these injuries is unknown; that on June 20, 1968, plaintiffs filed their actions against Joyce Rievley and Sue W. Humphreys, Administratrix of the Estate of Herman O. Wilkerson; that on September 18, 1969, the plaintiffs took a default judgment against Mrs. Rievley, but that plaintiffs took a non-suit against Sue W. Humphreys, Administratrix, thus waiving any claim against the estate of Herman O. Wilkerson, who was insured by defendant Nationwide Insurance Company; and that the trial court entered judgments for plaintiffs in the aforementioned amounts against Mrs. Rievley. State Farm denies that it was promptly notified of the pendency of the actions by plaintiffs against Joyce Rievley and Mrs. Humphreys in her representative capacity in that it was not served with a copy of the original summons until January 9, 1969.
State Farm further alleged that it is not liable under the policy to pay the judgments for various reasons. These reasons are: (1) that plaintiffs acted 'in bad faith' by taking a non-suit against Sue W. Humphreys, Administratrix, and a default judgment against the uninsured motorist without the knowledge or consent of State Farm; (2) that by the provisions of the policy the judgments entered in favor of the plaintiffs are not conclusive against State Farm as to either responsibility for injury or the amount of damages incurred since the action was prosecuted without the written consent of the company; (3) that by taking a voluntary non-suit against Mrs. Humphreys the plaintiffs made a settlement with a person who may be legally liable for the injury sustained without the consent of the insurer which by the terms of the policy relieves State Farm from any liability; (4) that plaintiffs failed to furnish defendant State Farm with a copy of the declaration filed against Rievley and the administratrix which is required by the terms of the contract under the uninsured automobile coverage; (5) that State Farm has no liability in that there was 'other similar insurance' available to the plaintiffs and by the express terms of the policy the coverage provided by State Farm 'shall apply only as excess insurance over any other similar insurance' which is available to the insured.
The parties in the court below entered into a number of stipulations. The substance of these stipulations is:
Nationwide had liability insurance on the vehicle of Herman O. Wilkerson. This policy provided for uninsured motorist coverage with a policy limit of $30,000.00. Prior to any actions being instituted by plaintiffs against Joyce Rievley and Sue Humphreys, Administratrix, Nationwide paid the total amount of its coverage under the uninsured motorist provisions of the policy to the estate of Herman O. Wilkerson.
On January 9, 1969, defendants were notified of the pendency of the actions by plaintiffs against Mrs. Rievley and Mrs. Humphreys. Defendants were notified by service of process in compliance with the provisions of T.C.A. § 56--1153; however, State Farm denies that the statute is applicable to the case at bar.
On September 18, 1969, a non-suit was taken against the administratrix, and the plaintiffs took a default judgment against Mrs. Rievley. The judgments against the uninsured motorist have not been satisfied as Joyce Rievley is execution proof.
Joyce Rievley is an uninsured motorist within the definition of that term in the insurance policies issued by both defendants. Both policies containing the uninsured automobile coverage were in full force and effect at the time of the accident. Plaintiffs have made demand on defendants to pay the judgments, but defendants have declined to pay any amount to plaintiffs.
T.C.A. § 56--1153 provides as follows:
'Service upon the insurance carrier--Arbitration not required.--Any insured intending to rely on the coverage required by §§ 56--1148--56--1153 shall, if any action is instituted against the owner and operator of an uninsured motor vehicle, serve a copy of the process upon the insurance company issuing the policy in the manner prescribed by law, as though such insurance company were a party defendant; such company shall thereafter have the right to file pleadings and take other action allowable by law in the name of the owner and operator of the uninsured motor vehicle or in its own name; provided, however, that nothing in this paragraph shall prevent such owner or operator from employing counsel of his own choice; provided, further, that the evidence of service upon the insurance carrier shall not be made a part of the record.
The uninsured motorist provision shall not require arbitration of any claim arising thereunder nor shall the insured be restricted or prevented in any manner from employing legal counsel or instituting legal proceedings. (Acts 1967, ch. 371, § 6.)'
The trial judge, after argument by counsel and viewing the entire record, dismissed plaintiffs' suits against defendant Nationwide. However, the trial judge viewed plaintiffs' cause of action against defendant State Farm to be well taken and ordered State Farm to pay plaintiffs the amounts that had previously been awarded plaintiffs against the uninsured motorist, Mrs. Rievley.
From this judgment, State Farm excepted, prayed and perfected an appeal. Likewise, plaintiffs excepted to the action of the court below in dismissing their causes of action against Nationwide, and the Hales have seasonably perfected their appeals to this Court.
State Farm has assigned five errors to the judgment of the court below. These assignments are:
'1. The Court committed error in failing to dismiss the suit against State Farm for bad faith because Barry and Wallace Hale, without notice or consent of State Farm, took a nonsuit in the case against the host driver-joint tortfeasor; and further by taking a default judgment against the uninsured motorist. By this method, the Hales abandoned their claims against the host driver-joint tortfeasor, the full amount of which would have been recoverable from Nationwide Insurance under coverage 'E'.
2. The Court committed error in failing to dismiss the suit against State Farm as the judgments of the Hales against the uninsured motorist are not conclusive, either as to liability or damages as provided in the State Farm policy under: 'INSURING AGREEMENT III--UNINSURED MOTORIST COVERAGE', Coverage U, paragraph 2.
3. The Court committed error in failing to...
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